338.1 
N47r 


OA1T55T ,HDSF 


REPLY 


OF 


-*sr 


SPECIAL  COMMITTEE 


OF  THE 


New  Orleans  Cotton  Exchange 
on  Discrimination  in  Trans- 
portation Rates 


AND  OTHER  BURDENS 


Upon  the  Cotton  Commerce 


OF   THE 


City  of  New  Orleans 


TO 


THE  ILLINOIS  CENTRAL  RAILROAD. 


_    DECEMBER  11.  1909. 


;;aRY 
UNIVERSITY  OF  ILLINOIS 
AT  UR."  PAIGN 


REPL.Y 

OF 

SPECIAL  COMMITTEE 

OF  THE 

New  Orleans  Cotton  Exchange  on  Discrimination  in 

Transportation  Rates  and  Other  Burdens 

Upon  the  Cotton  Commerce 

OF   THE 

CITY  OF  NEW  ORLEANS 

TO 

THE  ILLINOIS  CENTRAL  RAILROAD 


To  the  Board  of  Directors  of  the  New  Orleans  Cotton  Exchange: 

Your  special  committee  on  Discrimination  in  Transportation 
Rates  and  other  BurcUns  upon  the  Cotton  Commerce  of  the  City 
of  New  Orleans,  submits  as  supplemental  to  its  report  of  Novem- 
ber 26,  1909,  the  following : 

Subsequent  to  the  publication  of  our  report  of  November  26th. 
the  general  agent  of  the  Illinois  Central  Railroad  Company,  pre- 
ferred the  request  that  the  said  company  be  given  a  bearing  in 
order  that  certain  alleged  mistakes  of  fact  contained  in  our  said 
report,  might  be  corrected.  This  request  was  readily  acceded  to, 
and  pursuant  to  appointment,  on  Thursday  the  .  afternoon  of 
December  2nd,  our  committee  received  the  president,  the  general 
traffic  manager,  the  general  agent,  the  general  freight  agent,  the 
foreign  freight  agent,  and  several  other  officials  of  the  Illinois 
Central  Railroad,  together  with  the  local  representatives  of  the 
Leyland  and  Harrison  Steamship  lines. 


Reply  ok  Special  Committee  on    Discrimination. 


After  a  courteous  assurance  by  the  president  of  the  railroad 
company  of  his  own  and  his  company's  friendly  regard  for  the 
people  and  the  port  of  New  Orleans,  and  after  the  further  state- 
ment that  his  company  had  spent  and  was  still  spending  large 
sums  of  money  for  the  purpose  of  giving  this  port  a  system  of 
terminals  among  the  finest  in  the  world,  another  official  of  the 
railroad  company  read  a  brief  which  purported  to  be  the  specific 
denial  promised,  of  the  correctness  of  the  allegations  of  fact  con- 
tained in  our  said  report,  in  so  far  as  such  allegations  related  to 
the  Illinois  Central  Kailroad. 

This  alleged  denial  of  facts  as  presented  to  our  committee  and 
as  published  in  the  newspapers  of  the  3rd  instant,  and  which 
denial,  it  is  assumed,  constitutes  the  railroad's  case,  is  marshalled 
under  five  separate  heads.  We  shall  consider  each  head  separ- 
ately, answer  each  categorically,  and  confine  the  discussion  to  an 
acceptance  of  each  specific  challenge.    We  shall  show  that : 

Item  No.  1  is  a  denial  of  a  charge  that  was  not  made,  and  an 
admission  of  the  charge  that  was  made. 

Item  No.  2  is  an  unequivocal  admission  of  the  charge  it  pur 
ports  to  answer. 

Item  No.  3  is  a  denial  of  the  correctness  of  an  illustration  and 
not  a  denial,  hut  an  admission  of  the  truth  sought  to  be  illus- 
trated. 

Item  No.  4  is  equivocal  and  does  not  answer  our  charge. 

Item  No.  5  is  an  unequivocal  admission  of  the  facts  alleged  in 
our  report. 

We  now  discuss  the  defenses  in  order : 


Reply  op  Special  Committee  on   Discrimination. 


Control  op  Ocean  Booking  and  Effect  of  Combination 

Between  the  Railroad  Company  and  Preferred 

Steamship  Lines. 

Under  this  head  the  railroad  alleges: 

"We  have  no  arrangement,  agreement  or  compact  of  any 
sort  with  any  regular  steamship  lines  or  railroads  whereby 
we  are  given  the  power  to  make  rates  and  control  the  move- 
ment of  cotton ;  no  understanding  exists  that  would  pre- 
vent our  patronizing  tramp  steamers  if  in  our  opinion  we 
should  find  it  to  be  of  advantage  to  do  so  at  any  time. ' ' 

The  statement  then  trails  off  into  an  argument  going  to 
show  that  the  interest  of  the  railroad,  the  steamship  lines,  the 
shipper  and  all  concerned  is  best  served  by  the  very  arrangement 
that  we  charge  the  railroad  and  the  steamship  lines  with  having 
made. 

In  no  part  of  our  report  do  we  make  the  allegation  that  the 
railroad  had  any  arrangement,  agreement  or  compact  whereby, 
or  by  reason  of  which,  the  railroad  was  given  the  power  to  fix 
rates  and  control  the  movement  of  cotton.  We  stated  that  the 
railroad  had  the  power  to  do  these  things  and  exercised  this 
power,  and  was  thereby  enabled  to  make  the  arrangement  com- 
plained of.  to  the  detriment  of  our  market  and  our  port.  We 
have  nowhere  alleged  that  the  railroad  was  in  any  arrangement 
or  compact  that  would  prevent  it  from  patronizing  tramp  steam- 
ers or  any  other  kind  of  steamers,  if,  in  its  opinion,  advantage 
would  accrue  to  it  therefrom.  We  have  not  complained  that  the 
railroad  has  tied  itself  up  with  any  steamship  or  railroad  lines 
in  such  way  as  to  prevent  it  looking  after  its  own  interests.  On 
the  contrary,  we  have  complained  that  the  railroad  has.  and  ex- 
ercises, too  much  liberty  in  this  regard. 

We  have  made  the  statement  that  the  railroad  through  the 
exclusive  ocean  booking  privilege  which  it  claims  and  enforces, 


Reply  op  Special  Committee  on  Discrimination. 


denies  the  shipper  any  choice  in  the  selection  of  the  ocean  car- 
rier of  his  cotton ;  and  this  the  railroad  does  not  deny.  We  have 
made  the  statement  that  the  railroad  has  selected  two  lines  of 
steamships,  with  which  lines  it  has  for  years  booked  exclusively 
every  bale  of  cotton  that  it  carries  to  this  port  on  a  through  bill 
of  lading  to  Liverpool;  and  this,  neither  the  railroad  nor  the 
steamship  lines  deny,  but  admit.  "We  have  made  the  statement 
that  these  two  lines  have  a  monopoly  of  the  Liverpool  rates,  that 
all  other  ships  or  lines,  whether  tramp  or  regular,  or  whether 
reliable  or  otherwise,  have  been  driven  out  of  the  Liverpool  trade 
from  this  port,  and  that  competition  in  Liverpool  traffic  out 
of  New  Orleans  is  dead.  These  allegations  neither  the  railroad 
nor  the  steamship  lines  in  question  deny,  nor  attempt  to  deny, 
nor  can  deny,  because  they  are  facts  indisputable  and  known  to 
all.  They  expressly  admit  this  monopoly  by  defending  it.  The 
railroad  does  not  call  it  monopoly,  however,  but  the  ' '  prevention 
of  congestion"  and  claims  that  the  benefits  thereof  to  all  con- 
cerned outweigh  the  advantage  of  open  competition.  This  we 
deny. 

II. 

The  Two  Cent  Brokerage. 

In  our  report  we  stated  that  the  collection  by  the  railroads  ol 
2  cents  per  bale  for  ocean  booking  was  not  attempted  or  per- 
mitted in  any  ports  except  New  Orleans  and  Mobile.  The  rail- 
road does  not  deny  this  statement ;  on  the  contrary,  it  is  specifi- 
cally admitted.  It  is  further  stated  by  the  railroad  that  it  has 
been  collecting  this  brokerage  for  the  past  twenty  years  and  that 
this  fact  was  well  known  to  some  of  the  members  of  our  com- 
mittee. The  point  here  made  being  apparently  that,  although 
the  railroad  does  collect  the  brokerage,  its  right  to  do  so  is  pro- 
tected by  some  sort  of  unwritten  law  of  limitations.  The  rail- 
road claims  that  the  charge  does  not  fall  upon  the  shipper  or 
consignee,  and  that  no  one  is  hurt  thereby ;  and  it  finally  con- 


Reply  op  Special  Committee  on  Discrimination.         5 

eludes  the  paragraph  with  an  offer  to  waive  this  brokerage,  pro- 
vided that  all  the  other  railroad  lines  and  freight  brokers  will 
do  likewise. 

The  collection  of  the  2  cents  brokerage  is  not  in  itself  im- 
portant. It  becomes  important  because  it  is  a  development  of  the 
injurious  and  unjust  system  of  compulsory  ocean  booking  en- 
forced by  the  railroad.  It  is  worthy  of  notice  because  it  is  an 
outgrowth  of  the  monopoly  arrangement  complained  of.  The 
freight  broker  earns  his  brokerage  by  stirring  competition  be- 
tween the  ocean  carriers  and  securing  lower  rates  out  of  the  port, 
to  the  benefit  of  the  port  and  the  shipper.  The  railroad  secures 
its  brokerage  through  stifling  competition  and  enabling  the 
exclusive  ocean  carriers  to  fix  their  own  rates,  to  the  injury  of 
the  port  and  the  shipper.  The  offer  of  the  railroad  to  waive 
its  brokerage  if  the  other  railroad  lines  will  do  the  same,  is  fair, 
but  the  offer  as  applied  to  the  freight  brokers  is  unfair,  if  not 
disingenuous.  The  service  performed  by  the  two  agencies  is 
radically  different  in  purpose  and  in  result.  The  one  earns  its 
compensation  for  work  actually  done  in  the  promotion  of  com- 
petition for  freight ;  the  other  is  enabled  to  levy  this  assessment 
because  it  has  destroyed  such  competition. 

We  do  not  find  in  this  paragraph  of  the  railroad's  answer  any 
denial  of  any  statement  of  fact  made  in  our  report. 

III. 

Discrimination  Against  New  Orleans  by  Means  op  the 

"Billing"  and  "Reshipping"  Rates.     The 

Canton  Example. 

The  only  actual  contradiction  of  any  statement  of  fact  made 
in  our  report  occurs  in  this  third  sub-division  of  the  railroad's 
brief.  But  the  denial  is  not  a  denial  at  all.  It  goes  to  the  letter, 
not  to  the  substance  of  our  complaint.  We  stated  that  the  "bill- 
ing" and  "reshipping"  rates  and  arrangements  gave  the  Mem- 


6         Reply  of  Special  Committee  on   Discrimination. 


phis  market  an  unwarranted  and  unjust  advantage  over  the  New 
Orleans  market.  We  selected  Canton,  Mississippi,  because  it  was 
about  midway  between  Memphis  and  New  Orleans,  and  we  applied 
these  rates  and  regulations  to  shipments  out  of  Canton  as  an 
illustration.  The  railroad  does  not  deny  the  charge  of  discrimin- 
ation, but  claims  that  it  can  "easily  refute  the  statement  of  the 
specific  instances  of  rate  discrimination  referred  to."  It  do^s 
not  deny  the  charge  of  discrimination,  but  says  that  such  dis- 
crimination does  not  apply  to  shipments  out  of  Canton. 
We  quote  this  sub-division  in  full : 

"Third.     We  can  easily    refute  the    statement  of    the 
specific 

Instances  of  Rate  Discrimination 

referred  to.  In  the  case  of  Canton,  it  is  a  fact  that  the  rate 
on  uncompressed  cotton,  Canton  to  New  Orleans,  is  $2.40 
per  bale,  the  distance  being  205  miles,  and  the  same  rate 
applies  from  Canton  to  Memphis,  a  distance  of  188  miles, 
but  it  is  not  correct  that  under  the  reshipping  arrangements 
referred  to  in  the  report  of  the  committee,  that  this  rate, 
Canton  to  Memphis,  is  afterwards  reduced  by  refund  of 
77y2  cents  per  bale  to  a  net  rate  of  $1.62y2  per  bale.  It 
appears,  however,  that,  through  a  mistake  of  a  rate  clerk  in 
our  central  freight  office,  we  publish  from  Canton  a  net 
reshipping  rate  of  $1.62y2  per  bale  on  cotton  destined  to 
Eastern  cities,  but  as  Canton  is  a  compress  point,  it  never 
was  the  intention  to  give  reshipping  arrangements  at  Mem- 
phis on  cotton  from  compress  points;  but,  even  so,  the  re- 
shipping rate  of  $1.62%  which,  as  stated,  was  made  through 
mistake,  would  not  apply  on  a  shipment  to  New  Orleans, 
but  only  on  a  reshipment  to  Eastern  cities.  However,  since 
October  19  of  this  year,  when  the  rate  was  canceled  by  the 
present  tariff,  there  has  been  no  such  reshipping  rate  of 
$1.62]/»  on  cotton  from  Canton,  even  to  Eastern  cities,  so 
that  we  now  have  the  following  adjustment: 


Reply  of  Special  Committee  on   Discrimination. 


Per  bale. 

Canton  to  New  Orleans  (uncompressed) $2.40 

Drayage  to  shipside .15 

Total    $2.55 

Canton  to  Memphis   (uncompressed) $2.40 

Memphis  to  New  Orleans,  shipside   (compressed)..        1.00 

Total     $3.40 

which  shows  a  difference  in  favor  of  direct  shipment  from 
Canton  to  New  Orleans  of  85  cents  per  bale,  as  against  the 
combination  on  Memphis.  We  fail  to  see  wherein  any  just 
grounds  of  discrimination  can  be  lodged  against  us  on  this 
score. ' ' 

It  will  be  observed  that  the  railroad  admits  that,  through  an 
error  of  one  of  its  rate  clerks,  it  published  in  one  of  its  tariffs  a 
net  "reshipping"  rate  of  $1.62%  from  Canton  into  Memphis,  as 
was  alleged  in  our  report,  but  denies  that  this  rate  could  be 
obtained  on  reshipments  to  New  Orleans,  but  only  on  reshipments 
to  Eastern  cities.  It  is  claimed,  however,  that  since  October  19, 
1909,  a  new  tariff  has  been  in  effect  which  cancels  the  reshipping 
rate  from  Canton  and  other  compress  towns,  and  since  that  time 
there  has  been  no  such  rate  out  of  Canton,  even  to  Eastern  cities. 
It  is  then  shown  by  figures  taken  from  the  new  tariff  that 
the  rate  on  a  bale  of  cotton  from  Canton  to  Memphis  and  thence 
back  through  New  Orleans  is  $3.40  instead  of  $2.62%  as  stated 
by  us.  The  railroad  thus  summarily  dismisses  this  charge  of  dis- 
crimination by  the  assertion  that  it  is  answered.     Is  it '.' 

Tariff  314-B  now  in  force,  and  which  the  railroad  claims  cor- 
rected its  own  previous  mistakes  and  rectified  the  discrimination 
complained  of.  shows  on  pages  12,  13,  14,  that  there  are  more  than 
three  hundred  Mississippi  points  enjoying  the  Memphis  "re- 
shipping" rates  and  arrangements.  We  admit  that  Canton  is 
not  among  these  points.    It  is  also  true  that  many  of  these  towns 


8         Reply  of  Special  Committee  on  Discrimination. 


are  in  the  neighborhood  of  Memphis,  but  many  others  are  not. 
Take,  for  instance,  the  eighteen  towns  in  the  Aberdeen  district, 
the  twenty-one  towns  in  the  Yazoo  district,  the  twenty-five  towns 
in  the  Water  Valley  district,  or,  to  come  nearer  heme,  take  the 
five  towns  in  the  Canton  district,  all  on  the  line  of  the  Illinois 
Central  Railroad  between  Canton  and  Jackson,  and,  to  be  more 
specific,  take  one  of  these  towns — Madison,  for  instance. 

Madison  is  distant  201  miles  from  Memphis,  and  191  miles 
from  New  Orleans.  It  is  twelve  miles  south  of  Canton  and  only 
twelve  miles  north  of  Jackson.  The  "billing"  rate  on  an  un- 
compressed bale  of  cotton  from  Madison  to  Memphis  is  $2.40; 
the  rate  to  New  Orleans  is  $2.35.  But  the  "reshipping"  rate 
from  Madison  to  Memphis  is  $1.92%,  or  47i/oc  less  than  the 
' '  billing ' '  rate.  Therefore,  the  consignee  of  a  shipment  of  uncom- 
pressed cotton  from  Madison  is  able,  by  reason  of  the  reshipping 
rates  and  regulations  authorized  by  Tariff  314-B.  now  in  force, 
to  bring  cotton  into  Memphis  from  said  point  for  42 \/2  cents  per 
bale  less  than  the  consignee  at  the  New  Orleans  spot  market  can 
bring  the  same  shipment  to  New  Orleans ;  and  this  in  spite  of  the 
fact  that  Madison  is  six  miles  nearer  to  New  Orleans  than  it  is 
to  Memphis.  Unless,  therefore,  this  Madison  rate  has  been  pub- 
lished through  an  error  of  a  rate  clerk,  it  serves  to  illustrate  our 
contention  fully  as  well  as  the  Canton  example  recently  denied. 

Tariff  314-B,  now  in  force,  gives  even  stronger  grounds  for 
complaint  than  Tariff  314-A,  from  which  we  endeavored  to  quote 
in  our  former  report.  As  we  understood  the  "reshipping"  rules 
and  regulations  at  Memphis,  we  concluded  that  the  refund  on  re- 
shipments  applied  only  upon  equivalent  shipments  out  of  Mem- 
phis through  New  Orleans.  "We  are  now  definitely  informed  by 
Tariff  314-B,  now  in  force,  as  well  as  by  the  explanation  in  the 
railroad's  brief  here  quoted,  that  such  refund  can  be  obtained 
only  upon  the  condition  that  the  equivalent  shipment  out  of 
Memphis  shall  go  to  Eastern  cities.  According  to  our  former 
understanding  the  railroad,  while  discriminating  against  the  New 


Reply  of  Special  Committee  on  Discrimination. 


Orleans  spot  market,  was  offering  an  inducement  to  increase  the 
volume  of  shipments  through  the  port.  It  now  appears  that  the 
spot  market  is  still  discriminated  against,  and  even  the  port  move- 
ment is  not  favored. 

In  view  of  the  foregoing,  it  would  hardly  seem  necessary  to 
defend  in  any  detail  our  use  of  the  Tariff  314-A,  which  has  been 
superseded  by  Tariff  314-B.  It  may,  however,  be  well  to  observe 
that  Tariff  314-B  shows  under  the  head  of  "Cancellation"  the 
following  exception: 

"The  rates  and  rules  shown  herein  supersede  rates  and 
rules  in  Tariff  314-A,  I.  C.  C.  No.  4016,  C.  R.  C.  No.  89, 
except  that  cotton  which  moved  from  original  points  of 
shipment  prior  to  October  19,  1909,  into  Memphis,  Tenn:, 
and  is  reshipped  compressed  from  Memphis,  Tenn.,  on  or 
after  October  19,  1909,  is  subject  to  the  rates  and  rules 
shown  in  Tariff  314-A,  I.  C.  C.  No.  4016,  C.  R.  C.  No.  89." 

It  is,  therefore,  true  that  whatever  the  "reshipping"  rates 
and  rules  incorporated  in  said  erroneous  tariff  might  have  been, 
such  rates  and  rules  are  permitted  now,  and  will  continue  to 
permit,  until  the  end  of  the  season,  the  collection  of  the  refund 
upon  the  amount  of  cotton  shipped  out  of  Memphis  to  Eastern 
cities,  equivalent  to  the  amount  of  this  early  moving  crop 
shipped  into  Memphis  from  original  points  prior  to  October  19, 
1909. 

The  premises  considered,  we  reiterate  our  charges  of  discrim- 
ination against  the  New  Orleans  market  and  in  favor  of  the 
Memphis  market  in  the  matter  of  the  "billing"  and  "reship- 
ping" rates  and  regulations;  and,  in  substantiation  of  said 
charge,  we  refer  to  I.  C.  R.  R.  and  Y.  &  M.  V.  R.  R.  Tariff  No. 
314-B,  now  admitted  by  the  railroad  to  be  in  effect  and  acknowl- 
edged to  be  correct. 


10       Reply  op  Special  Committee  on  Discrimination. 

IV. 

Discriminations  at  the  Terminals. 

(1)  Under  this  head  the  railroad  denies  "that  the  consignee 
of  a  car  of  compressed  cotton  on  a  local  bill  of  lading  must  re- 
ceive the  shipment  at  the  I.  C.  local  depot,  even  though  he  has 
engaged  ocean  freight  room  and  wants  to  ship  his  cotton  directly 
out."  The  railroad  further  states  that  "we  are  willing  to  permit 
a  local  consignee  to  load  his  cotton  into  the  ship  on  the  railroad's 
terminals  if  he  so  elects,  provided,  of  course,  that  the  consignee 
gives  notice  of  his  desire  in  time  to  have  his  car  switched  along 
with  the  through  cotton  to  the  terminals  instead  of  to  the  local 
depot." 

It  would  be  more  satisfactory  if  the  above  denial  was  some- 
what broader  and  not  so  literal.  Our  charge  had  reference  to 
what  had  been  done  in  the  premises;  the  railroad  states  what  it 
is  willing  to  do.  It  would  also  clarify  the  issue  to  some  extent 
if  the  railroad  would  state  whether  or  not  the  above  mentioned 
permission  carried  with  it  any  additional  charge  to  the  consignee. 
As  the  railroad 's  answer  is  worded,  we  are  not  quite  sure  whether 
the  denial  applies  to  the  conditions  of  the  immediate  present 
or  to  the  rules  that  governed  in  the  past ;  nor  are  we  quite  sure 
whether  the  substance  or  the  mere  form  of  our  complaint  is 
contradicted. 

(2)  Under  this  head  the  railroad  further  states: 

"With  reference  to  terminating  our  responsibility  on  cot- 
ton delivered  to  the  Public  Belt,  it  is  not  our  desire  or  in- 
tention to  evade  any  responsibility  which  legally  or  legiti- 
mately belongs  to  this  company,  but  we  cannot  undertake 
•  to  be  responsible  for  loss  or  damage  to  cotton  or  other 
freight  occurring  after  the  same  has  been  delivered  to  the 
Public  Belt  Railroad.  This  rule  governs  all  transportation 
companies,  and  is  in  full  force  and  effect  throughout  the 
entire  country." 


Reply  of  Special  Committee  on   Discrimination.       11 


Our  charge,  against  which  the  foregoing  denial  is  supposed  to 
apply,  was  that  the  railroad  prevented  the  local  consignee  from 
directing  transfer  to  the  Belt,  by  declining  responsibility,  not 
only  for  the  completeness  and  safety  of  the  shipment  subsequent 
to  the  delivery  to  the  Belt,  which  we  admitted  was  right,  but 
for  shortage  occurring  or  damage  inflicted  prior  to  .such  delivery, 
which  we  declared  was  wrong.  The  railroad  evades,  avoids,  or 
does  not  notice  the  only  charge  made  by  us  on  this  count. 


Discriminations  Against  New  Orleans  in  the  Matter  op 
Through  Cotton. 

Under  this  head  the  railroad  discusses  our  charge  that  because 
of  rate  manipulation  by  the  railroads  centering  at  Memphis,  New 
Orleans  is  deprived  of  the  benefits  to  which  it  is  logically 
entitled  by  reason  of  its  natural  advantage  in  point  of  location 
and  proximity,  and  the  south  Atlantic  ports  to  that  extent 
favored.  We  claimed  that  on  the  natural  and  equitable  basis 
of  mileage,  or  distance,  the  Memphis  rate  through  New  Orleans 
to  Liverpool  should  be  45  cents  per  bale  less  than  the  rate  from 
Memphis  through  the  south  Atlantic  ports,  whereas,  under  the 
adjustment  now  in  force,  the  rate  from  Memphis  through  New 
Orleans  is  practically  the  same  as  the  rate  from  Memphis  through 
the  south  Atlantic  ports. 

The  railroad  makes  no  denial  of  the  correctness  of  our  state- 
ment of  rates  and  distances,  but  defends  the  present  adjustment 
upon  the  ground  that  the  keen  competition  out  of  Memphis  forces 
an  equality  in  rates  from  Memphis  to  Liverpool  without  regard 
to  the  fact  that  the  railroad  haul  from  Memphis  via  New  Orleans 
is  400  miles,  as  against  700  miles  via  the  south  Atlantic  ports. 

If  this  theory  of  rate  adjustment  is  correct,  then  position  and 
proximity  cease  to  be  factors.     If  competition  annihilates  three 


12       Reply  of  Special  Committee  on  Discrimination. 

hundred  miles  of  space  it  can  absorb  a  thousand  miles.  If  there 
was  competition  at  Jackson,  Mississippi,  for  instance,  in  ship- 
ments via  south  Atlantic  ports,  under  this  theory  it  would  be 
entirely  proper  to  so  adjust  rates  that  Jackson  cotton,  and  cotton 
localed  into  Jackson,  would  go  to  Liverpool  through  Savan- 
nah on  the  same  rate  that  it  would  take  through  New  Orleans 
to  the  foreign  port.  The  keenness  of  competition  at  Memphis  is 
admitted,  but  the  trouble  seems  to  be  that  the  railroads  leading 
to  the  south  Atlantic,  ports  are  competing  somewhat  more 
vigorously  and  to  somewhat  better  purpose  than  are  the  railroads 
leading  to  New  Orleans.  At  this  point  this  question  naturally 
arises:  If  rail  competition  in  the  interior  works  so  potently 
towards  the  reduction  of  inland  rates,  why  would  not  competition 
in  ocean  rates  at  the  pert  be  similarly  operative  in  the  adjust- 
ment of  foreign  rates? 

The  Protest  op  the  Steamship  Lines  in  the  Combination. 

The  spokesman  for  the  Harrison  and  Leyland  lines  of  steam- 
ships protested  that  there  existed  no  binding  compact  between 
the  said  lines  and  the  railroad  company  that  would  prevent  the 
former  from  drawing  out  of  the  New  Orleans  trade,  or  the  latter 
from  patronizing  any  other  lines  of  steamers  should  it  see  fit 
to  do  so. 

We  have  at  no  time  nor  in  any  place  alleged  the  existence  of 
any  such  compact. 

The  steamship  representative  made  an  argument  going  to  show 
that  the  monopoly  of  ocean  carriage  and  the  arrangement  that 
produced  such  monopoly  were  beneficial  to  all  concerned. 

We  expected  that  all  parties  interested  in  such  monopoly  and 
in  such  arrangement  would  so  argue. 

The  representative  in  question  extolled  the  regularity  and  ex- 
cellence of  the  service  maintained  by  said  steamship  lines. 


Reply  of  Special  Committee  on  Discrimination.       13 


We  have  never  denied  this  excellence  and  regularity;  on  the 
contrary,  it  gives  us  pleasure  to  testify  to  the  excellence  and 
regularity  of  the  service  maintained  by  these  lines,  and  to  com- 
mend the  same.  Our  complaint  is  not  against  the  service  main- 
tained by  the  steamship  lines,  but  against  the  combination  be- 
tween said  lines  and  the  railroad,  whereby  other  ships  and  other 
lines  are  prevented  from  offering  the  same  or  better  service  at 
lower  rates. 

The  said  representative  took  some  pains  to  show  by  figures 
covering  a  series  of  years  that  the  rates  from  New  Orleans  to 
Liverpool  given  by  his  lines  were  actually  lower  tlian  the  rates 
to  certain  Continental  ports. 

We  do  not  controvert  these  figures.  It  would  be  unnatural  and 
extraordinary  if  the  Liverpool  rates  were  not  lower,  for  one 
reason — because  Liverpool  is  nearer.  But  this  representative 
does  not  undertake  to  deny  our  statement  that  the  south  Atlantic 
ports,  by  reason  of  steamship  competition  there,  at  times  enjoy 
a  Liverpool  rate  as  low  as  18  cents,  and  sometimes  lower,  which 
is,  relatively,  6  or  more  cents  lower  than  the  rate  given  by  the 
two  exclusive  lines  out  of  New  Orleans.  Nor  does  he  deny  or 
explain  why  the  Liverpool  rate  from  the  city  wharves  in  New 
Orleans,  charged  the  merchant  of  New  Orleans,  on  local  ship- 
ments, is  from  1  to  2  cents  higher  than  the  rate  from  the  I.  C. 
terminals  in  New  Orleans,  charged  the  interior  merchant  on  a 
through  bill  of  lading. 

Conclusion. 

The  essential  allegations  of  fact  contained  in  our  report — fo- 
unt: that  the  combination  between  the  railroad  and  the  pre- 
ferred steamship  lines  deprived  the  shipper  of  any  voice  in  the 
selection  of  the  ocean  carrier  of  his  cotton,  created  a  monopoly 
in  ocean  rates  and  injuriously  affected  the  business  and  com- 
merce of  this  city  and  port:  that  the  railroad  discriminated 
against  the  local  market  and  in  favor  of  the  through  business. 


14       Reply  op  Special  Committee  on  Discrimination. 

and  not  only  favored  the  latter  but  imposed  burdens  and  re- 
strictions upon  the  former — are  not  controverted  in  the  answer 
of  the  railroad  and  steamship  lines  in  question. 

Barring  the  wholly  immaterial  inaccuracy  in  the  selection  of 
one  city  and  town  in  one  of  our  illustrations,  when  a  nurabar 
of  other  places  could  have  been  used  to  fully  demonstrate  the 
principle  contended  for,  we  must  re-affirm  the  allegations  made, 
and  the  conclusions  reached  in  our  report  of  November  2Gth  last. 


Respectfully  submitted, 

W.  B.  Thompson,  Chairman; 

S.  W.  Weis, 

Chas.  W.  Shepard, 

Wm.  A.  Lorenzen, 

Silas  I.  Hyman, 

Jeff.  D.  Hardin,  Jr., 

Edward  Nathan.  Committee. 

New  Orleans,  December  11,  1909. 


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